As I understand things, Rubin’s position on derivatives regulation in the late 1990s had five parts:

1. Derivatives should be regulated, with proper disclosure and capital adequacy and information requirements, especially to protect unsophisticated investors.
2. Phil Gramm is chairman of the Senate Banking Committee, and would always rather regulate less rather than more — and the House side is even more so.
3. Brooksley Born and her organization are the wrong people to regulate derivatives.
4. Derivatives should be regulated with a light hand, because they are a small and specialized corner of financial markets and are simply not large enough to pose any systemic threat.
5. The Federal Reserve has adequate powers to stem financial crisis and keep it from becoming a threat to the economy, and is also not worried about derivatives.

As I see it, Rubin was correct on (1), (2), and (3). He was correct on (4) when he was in office — when derivatives were too small to pose any systemic threat to financial stability. But that changed in the 2000s. And Rubin was completely, utterly, and totally wrong about (5) (as was I).

One other place where Rubin was wrong in the late 1990s (and where I was right), was that he was not worried about the opacity of derivatives. He was confident that senior managers at large Wall Street firms could maintain control over their derivatives books, and understand what risks their firms were facing, and what risks their underlings were exposing their firms to.

There he was wrong.

During his time in the Clinton administration — from 1993 to 1995 — Mr. DeLong briefly served under Mr. Rubin in the Treasury Department.

Dan Froomkin of The Huffington Post takes the anti-Rubin side of the argument.

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